Dell joined a growing list of top-tier tech companies laying off employees, citing economic slowdown and lower demand for PCs and laptops.
In an SEC filing, Dell said it plans to lay off some 6,650 employees to "stay ahead of the downturn impacts," brought on by the widespread and ongoing macro-economic conditions.
In an internal memo to employees, co-COO Jeff Clarke said the decision was made despite several cost-saving measures taken by the company over the past year, including limiting travel, pausing external hiring and reducing outside service spending. Those efforts were not sufficient, and tougher measures had to be taken, he said.
In recent months, other major tech vendors reduced their workforces due to the slowdown in PC sales. They include Microsoft and PC maker HP, Inc., the latter laying off up to 6,000 over the next three years. Intel in January filed a notice to the state of California of its plans to lay off 544 employees in that state.
Also to blame for the layoffs at Dell, Google and others is the over-hiring tech companies engaged in during the pandemic.
"With the rapid onset of hiring during the pandemic, a lot of companies hired too quickly, paying significant premiums to bring in talent," said Dan Newman, an analyst at Futurum Research and CEO of Broadsuite Media Group. "But given the current circumstances, they are taking this moment to control costs, right-size their respective company and prepare for the next wave of growth."
Worldwide shipments of PCs tumbled 28% in the fourth quarter of 2022 compared to the year-ago quarter, according to recent numbers from IDC. Dell's PC shipments plummeted 37% in last year's fourth quarter, with Lenovo and HP's PC shipments falling 28% and 29% respectively.
At the root of the PC slowdown is the increasingly cautious buying patterns of large enterprises that are just as fearful as the vendors selling them PCs. For instance, if an enterprise PC user has a three-year-old PC and is line for an upgrade, IT departments may now have that user wait another six months to a year and kick that expense the next fiscal quarter or year, Gold noted.
"Users are bombarded with news about a recession coming and so they are pulling back [on PC purchasing] to protect themselves," said Jack Gold, an analyst with J. Gold Associates LLC. "To a certain extent, there is a herd mentality among larger accounts, which promotes a self-fulfilling prophecy."
In its analysis, CompTIA, a nonprofit association for the IT industry and its workers, reports that though the technology sector layoffs totaled 2,489 in January, the number of job postings for tech positions jumped by 22,408 to 268,898. CompTIA used job data from the career listing site Lightcast.
As Editor At Large with TechTarget's News Group, Ed Scannell is responsible for writing and reporting breaking news, news analysis and features focused on technology issues and trends affecting corporate IT professionals.